Lenders say they are nearly done with settlement terms

Published: Monday, August 26, 2013 at 1:00 a.m.

Last Modified: Sunday, August 25, 2013 at 10:01 p.m.

Nearly 120,000 Florida homeowners have received some type of relief under the landmark mortgage settlement with five giant lenders.

In a report issued last week, the settlement's monitor said that those homeowners have shared in $9.2 billion worth of short sales, forgiven debt and loan modifications.

That works out to $77,066 per homeowner via the agreement that lenders reached with federal and state regulators to resolve claims of mortgage and foreclosure abuses -- including the infamous "robo-signing" scandal -- during the financial crisis of 2008.

Nearly 30,000 more homeowners in Florida may receive another $3.8 billion in relief and modifications, according to the report from monitor Joseph A. Smith Jr.

Smith cautioned, however, that the data is self-reported by the lenders -- Bank of America, Citi, Chase, Wells Fargo and the ResCap Parties (formerly Ally Financial and GMAC) -- and must be confirmed.

"Over the past year, we have seen the amount of relief and number of borrowers it helped steadily increase," he said. "As the banks begin to reach their total consumer relief obligations, I am encouraged to see how the settlement has had a measurable impact on hundreds of thousands of borrowers and their communities across the nation."

In all, the national mortgage settlement between the lenders and 49 states over foreclosure misdeeds involves $25 billion.

Florida's share of the settlement was originally calculated at $8.4 billion. Most of it was targeted for loan modifications, including principal relief or reductions, which some analysts say could help further the state's real estate market rebound.

Another $170 million was available in payments to Florida borrowers who lost their homes to foreclosure between Jan. 1, 2008, and Dec. 31, 2011.

Nearly 32,000 Florida homeowners have received $3.48 billion in breaks through short sales, the largest dollar amount of relief. Some critics contend that has been of limited value to those homeowners, though, since they likely would have gone through short sales anyway.

Another 50,000 Floridians have received $3.4 billion as a result of second-mortgage debt being wiped out, though in many cases that debt would have been uncollectible.

And 10,900 Florida homeowners have gotten $1.43 billion in first-mortgage principal reduced, which experts say is the key to keeping people in their homes.

Nationwide, 643,726 borrowers have received some type of consumer relief totaling $51.3 billion, or an average of $79,742 per borrower, as of June 30.

But some have questioned how much the settlement has helped homeowners who were hurt by foreclosure abuses.

Smith said Bank of America, Chase and the ResCap Parties assert they have fulfilled their consumer relief obligations, and the others soon will. He said the banks have pledged to continue to offer loan modifications and other relief to eligible borrowers through their own programs.

In June, he said some homeowners were facing delays in reviews of their loan modification applications, which could put the borrowers deeper into debt. Florida Attorney General Pam Bondi made similar comments, specifically citing Bank of America's possible failure to comply with terms of the settlement. She said the bank accounted for nearly 40 percent of the 293 complaints her office had received from consumers about the settlement process.

Stock scams in the pot business

With the growth of medical marijuana across the U.S., it was only a matter of time before con artists would smoke out ways to profit.

The Financial Industry Regulatory Authority issued an investor alert last week, warning about potential scams related to medical marijuana and the legalization of pot in two states. The cannabis business has attracted a lot of attention lately, the securities regulator said, and that includes pitches for stock scams.

Investors may be enticed by "pump-and-dump" ploys involving marijuana-related companies, FINRA said. The fraudsters issue overly optimistic or even false statements designed to create demand for shares in a small, thinly traded company. Once the shares reach a peak, the scammers sell their holdings and leave the new investors with worthless stock.

The regulators cited one company that promoted its move into the medical cannabis business with more than 30 press releases in the first half of 2013.

Contact John Hielscher at 361-4875, fax to 361-4880 or email john.hielscher@heraldtribune.com.

Reader comments posted to this article may be published in our print edition. All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.